Buy or rent: which is more profitable?

The question of choosing between buying or renting a home remains relevant for those looking for a new apartment. Especially now, when mortgage rates are changing in the wake of decisions by the European Central Bank, making buying real estate more attractive.

A study conducted by the Tecnocasa Group's research department compared monthly mortgage payments and rental rates for two- and three-room apartments in Italy's largest cities. The results help determine when buying makes more economic sense than renting.

Buy or rent a two- or three-room apartment

The study is based on data for the first half of 2024 and takes into account average prices for middle-class secondary housing. Tecnocasa analysts modeled the purchase of a two- and three-room apartment under the following conditions:

• Mortgage for a term of 25 years.
• Average rate 3.94% (as of August 2024).
• Financing up to 80% of the property value.

The data compares monthly mortgage payments and average rents by city, and calculates the minimum income required to qualify for a loan.

Two-room apartments: buying becomes profitable

In many Italian cities, monthly mortgage payments for a two-room apartment are comparable or even lower than rent. This makes the purchase particularly attractive in the following cities:

• Bologna , Bari , Turin , Verona , Palermo , Genoa .

In major cities like Milan, Rome and Florence, mortgage payments still exceed rents, but the difference remains modest:

• +146 euros in Milan.
• +65 euros in Rome.
• +130 euros in Florence.

Even in Naples, where buying is currently less profitable, the difference is only 39 euros, making a mortgage an acceptable option for those looking to invest in property.

Three-room apartments: where is it better to buy

The situation with three-room apartments is similar. Monthly mortgage payments are more profitable than rent in cities such as:

• Bari , Verona , Turin , Palermo , Genoa , Bologna , Naples .

Even in expensive cities like Milan, Rome and Florence, the difference between a mortgage and rent is minimal:

• +18 euros in Milan.
• +20 euros in Rome.
• +152 euros in Florence.

This shows that, given the reduction in rates, purchasing a three-room apartment is becoming affordable even in more expensive cities.

The situation on the rental market

An additional factor pushing people to buy is the shortage of rental housing . In many cities, the rental market has shrunk significantly, making it difficult for renters to find housing. This structural imbalance, coupled with rising rents, is causing many to consider buying as a more sustainable and strategic alternative.

Outlook for 2025

According to Tecnocasa forecasts, in 2025, property prices are expected to continue to rise and the number of transactions to a small extent. This indicates that the market is stabilising at new levels.

However, lower mortgage rates make home ownership still affordable for those looking for a long-term investment. Despite potential price increases, buying remains a good deal in a tight rental market.

Conclusion

The decision to buy or rent depends on many factors: financial capabilities, market structure, personal preferences. However, the reduction of mortgage rates and the growth of rental rates in the conditions of housing shortage make the purchase of real estate increasingly attractive, especially in large Italian cities.